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Liam Booth-Smith: Let’s light all the ways to the top

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In part, the story of the digital revolution is the story of university drop-outs. Mark Zuckerberg canned Harvard in his second year. Bill Gates left in his third. Tumblr creator David Karp didn’t even finish high school.

The most influential leaders in the fastest-growing and most transformative market in the global economy don’t have degrees. Every child entering their GCSE years should be told this. They need to know there are many paths to the top. The job of government, meanwhile, is to clear barriers and light the way.

In the mid-1960s, about a third of school-leaving boys aged 15 to 17 took the apprenticeship route. Yet by 1999 there were only 59,000 apprenticeships available.

The May and Cameron governments have done more than most in the past few decades to support a resurgence. The target of three million new apprenticeships by 2020 is a touch tokenistic but sets a standard and projects ambition.

So does the policy attention given to the skills system in recent years. Reform of the qualifications system, the introduction of the new T-Levels and the apprenticeship levy, and more direct involvement in curation of specialist technical skills – such as the creation of National College for High Speed Rail – deserve recognition.

Yet elevated ambition and state activism have triggered important warning signals we should not ignore. Since the introduction of the levy, the number of apprenticeships has fallen.

Between August and October last year there were 49,800 fewer apprenticeship starts compared with the same period in the previous year. Of the 494,000 started between 2016 and 2017, only 36,000 were in higher or degree classifications. And of these, only 2,100 went to 18-year-old school leavers.

The levy system has been described by the Confederation of British Industry as “not fit for purpose”. And as learned a man as the Institute For Fiscal Studies’ Paul Johnson wrote in The Times how “staggeringly hard” it was to find out the right information – as he described helping a family member explore apprenticeship options.

Multiple reports have noted the negative effect of the system’s complexity. It needs to be easier to navigate. However, this is only part of the answer. We also need to dramatically increase businesses’ awareness of and engagement with the levy.

As of July 2017, research suggested that approximately 11,000 out of a possible 19,150 levy-paying businesses had failed to even register with the online service that enables them spend their account funds.

I would imagine this number has decreased since then, but with the Chartered Institute of Personnel & Development estimating that a fifth of businesses plan to treat the levy as a payroll tax and not use it, there is a serious risk of underutilisation.

The key is to be open-minded about how businesses use the money. Yes we ultimately want more new apprentices, but this is a long-term readjustment. In the first instance, there’s a strong argument to encourage more flexibility for businesses.

For example, some have strongly argued against the use of the levy for the retraining of existing staff, calling it ‘rebadging’ and contrary to the intended purpose.

But research by Institute for Fiscal Studies’ Professor Lorraine Dearden et al shows that in-work training has an association with both productivity and wage increases. If your area has a high proportion of lower-skilled industries – those traditionally least likely to invest in staff development – then this is a justifiable use of additional skills money.

The business lobby, and Localis, has argued for an expansion of the planned freedom to passport 10% of an organisation’s levy account down a supply chain. Businesses should be free to pass all of their levy to whoever they wish – so long as it’s spent on training and development.

Why shouldn’t a council be allowed to pool their funds with other local public sector partners and key businesses, and target the spending at key skills priorities, including apprenticeships?

As old industries die and new ones emerge, the look and feel of an apprenticeship will change. Companies like Pinterest, Airbnb, Visa and LinkedIn are looking beyond the traditional ‘degree to job’ routes and exploring a ‘hire first, train later’ approach. We should be encouraging British businesses to experiment with their hiring and training.

In turn, the government needs to create more flexibility in the policies it creates to encourage these businesses. We should start with the apprenticeship levy. Let’s pay attention to the early feedback, let’s act fast and clear those barriers. Let’s light the way.

Liam Booth-Smith, chief executive, Localis


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